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Can an electronic trader from home lease or purchase an exchange seat
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Can an electronic trader from home lease or purchase an exchange seat

  #11 (permalink)
Elite_Member
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Thanks everybody for all the replies. Personally I am nowhere near needing an exchange seat but I find this industry fascinating and like to 'read around a subject' and learn as much as I can. My original question was just to clear up something that I thought was correct but wanted to check after a couple of comments today, and I wasn't sure if I had completely misunderstood or mis-remembered Morad's webinar when I watched it a while back.
Without re-watching the webinar this morning I seem to recall FT saying that if you do more than a thousand round turns a month then leasing a seat is probably going to save you money (or something similar to that). The person I was listening to yesterday in their TST Newest Funded Trader interview had a lot of trading experience so their combine probably reflected a style of trading that they would be more closely following when live and through the short Live Scaling Plan period when your max contracts are limited until a profit cushion is built up. His total combine volume over ten days was 3818 contracts which is 1909 round turns from trading every day over two weeks in January. So as one of the questions from the chat room there I asked if he had or intended to lease an exchange seat in the future to reduce his fees, and the question was misinterpreted in the spur of the moment and included a couple of comments that made me wonder if I had made a mistake in believing that an independent home trader could be an exchange member. Thanks again for the clarification.

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  #12 (permalink)
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Given the price difference between leasing and buying a seat, what is the reason for buying over leasing? Currently 525k bid and 695k offer for buying the seat, or $1800 for a 6-month lease.

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  #13 (permalink)
Elite_Member
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Not an expert answer so maybe one of them will chime in, but most things in life seem to cost more in the future * so presumably you buy it and hope to be able to sell it a few years down the line for more than what you paid. Unlike leasing which is just spent money.
* Though I guess during stock market crashes seat prices drop rapidly with an oversupply in the market as people who lost their shirt, sell their seat.

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  #14 (permalink)
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TickedOff View Post
Given the price difference between leasing and buying a seat, what is the reason for buying over leasing? Currently 525k bid and 695k offer for buying the seat, or $1800 for a 6-month lease.


I'll take a stab.. A mining/energy company might choose to purchase over lease as the price would be insignificant vs its revenue. Plus they are presumably in it for the long haul. We once did a deal with a group in BHP iron ore, and they didn't even blink at our pricing proposal (which I thought was too high). That is to say, they make money faster than they can spend it.


From an investment perspective, you might look at the return from leasing your seat. A nymex seat is ~4-5% annual return at the moment.. vs the risk free rate of treasure notes. Of course thats if you could lease your seat for the whole year.

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  #15 (permalink)
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Given the price difference between leasing and buying a seat, what is the reason for buying over leasing? Currently 525k bid and 695k offer for buying the seat, or $1800 for a 6-month lease.

Leasing a seat gives you the trading privileges associated with that seat, but in order to clear you need to own two seats I believe.

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  #16 (permalink)
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Given the price difference between leasing and buying a seat, what is the reason for buying over leasing? Currently 525k bid and 695k offer for buying the seat, or $1800 for a 6-month lease.

You might find this thread interesting:
https://futures.io/index-futures-trading/38865-why-does-cme-iom-seat-price-keep-going-down.html


There might be different privileges between owning and leasing.
Some cannot afford to buy, so they lease.
Some are in it for the long term, so they buy.
As with anything, prices fluctuate and it is similar to the decision buying or renting your house.


Donnie

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